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Rarity, complexity and condition make all the difference when looking for a luxury watch.

But while there are major gains to be made, it takes a good eye to know the difference between a clever investment, and a waste of time.

In such a vast and specialist industry where prices range from $1,500 into the millions, it’s difficult to know where to start.

But the prospective investor can head to auction to find some of the most lucrative deals on luxury time pieces.

Geoffroy Ader of Sotheby’s says demand is highest for the best known names. "Most demands are based on the brands …the two ‘star’ brands are Rolex and Patek Philippe," Ader told CNBC.

Alfredo Paramico, fund manager at Precious Times which invests in luxury and rare time pieces, agreed that name is everything in this glamorous market.

Paramico brought three of the most exclusive watches in his collection – with a combined value of $40 million - into the CNBC studio.

"Here we have a once in a lifetime opportunity to have all together these three wrist watches, that are probably three of the most important watches in history ever," he said, displaying the platinum and white gold Patek Philippes.

Explaining the story and history behind each watch, Paramico showed that time pieces – just like luxury jewellery, antiques or wine – have a provenance which forms part of the value of the item.

The 18 carat white gold Patek Philippe he brought with him had sold in 1995 for 400,000 Swiss francs ($430,000). By 2010, its value had hit over 3.2 million ($3.47 million).

Heading to an established antique dealer is one way to source a watch with a proven history and origin. George Somlo of Somlo Antiques in London explained that investing in the right vintage watch is a good bet for troubled financial times.

"We’ve had many recessions over the past forty years, none of them quite like this one, but buying antique or vintage wristwatches and pocket watches has always been a very solid investment," Somlo said.

With Swiss watch exports up 19 percent in the first six months of the year, reaching $9 billion, the most significant demand has come from Asia.

lan Walker, of technology consultancy Capgemini told CNBC that watch investment was on the up: "within the investments of passion category, it’s about 22 percent for jewellery, watches and gems.

"What we really noticed last year is exponential growth in Asia, in particular mainland China and Hong Kong, so that’s where the growth is coming from at the moment…we are seeing record returns."

Although an unusual investment, watch-buying can be more than just a hobby for the super rich; you don’t have to be a big spender to get into this market.

"It’s not a question of how much you can invest," said Paramico, "I think it’s important that you buy a watch which is in very good condition and is totally original, even if it’s a $2,000 watch. Quality is a key issue in this business, approximation is definitely forbidden."

He advised to look at the brand; even with contemporary watches, a good, established name will hold its value.

Paramico also gave his hint for a smart watch investment. For $5,000, he said a rose gold 1940 Patek Philippe with a square case is a good bet for the future.